Compare the best student bank accounts with interest-free or 0% overdrafts for 2021-22 with our comparison tables.

Student bank accounts with railcards and other freebies

Once again, the top student account freebie for 2021-22 is offered by Santander.

It’s sticking with a free four-year Santander Railcard, worth around £90 (four-year cards aren’t available for general purchase but three-year Railcards cost £70 and one-year Railcards cost £30).

Santander doesn’t offer the largest interest-free overdraft but it does guarantee that you’ll get the maximum overdraft of £1,500 in years 1-3 if your application is successful.

Be aware that you need to pay in at least £500 every term and register for online banking to be eligible for this offer (and the overdraft).

Here is a rundown of the other freebies on offer this year:

 

HSBC – £80 plus £20 Uber Eats voucher or ASOS Premier

HSBC is also offering an attractive perk this year – an £80 cash bonus plus either a £20 Uber Eats voucher or ASOS Premier (which gives you free next day delivery for a year).

To be eligible for the £80 and reward, you’ll need to apply by 31 December 2021 and make at least five payments using the HSBC debit card linked to your student account (excluding gambling and financial services payments eg credit card insurance payments, cash withdrawals, and card to card payments.

You won’t get this freebie if were an existing HSBC Student Bank Account holder on or after 1 June 2017.

NatWest/RBS – £50 plus 4 year Tastecard

The NatWest/RBS student accounts come with £50 cash and a four year Tastecard, available until 5 November 2021.

You need to register for online or mobile banking and choose to receive paperless statements within 30 days of opening your account to receive your reward.

The £50 will be paid into your account within 10 working days of meeting the offer criteria.

Tastecard members get 2 for 1 or 50% off food at thousands of UK restaurants, plus discounts at the cinema (you’ll need a smartphone to use this).

Bank of Scotland/Lloyds – 3 year TOTUM card

Bank of Scotland and Lloyds student accounts come with a free three-year TOTUM card – but only if you open your account by 31 October 2021.

The TOTUM card is the new name for the NUS extra student discount card, which you can use for high-street and online shopping discounts.

Barclays – Perlego subscription

Once again all new Barclays Student Additions customers will get a free 12 month subscription to Perlego, the online library for academic and non-fiction books.

You must open the account by 30 November 2021.

A registration code and instructions will be sent via email, which you will need to redeem by 31 December 2021.

Student bank accounts paying interest

Most banks have stopped paying interest to students.

Santander no longer pays monthly interest on credit balances (last year it paid 1% AER on balances up to £2,000).

Previously, Nationwide paid 1% interest on balances up to £1,000 and first-year students with HSBC earned interest at 1.5% above base rate on balances up to £1,000, but both offers were scapped.

The only providers currently paying credit interest to students are Halifax and TSB.

Halifax pays 0.1% on any balance, TSB pays 5% interest on balances up to £500.

What happens if I exceed my overdraft limit?

With all of the accounts in our table, you won’t be charged interest or fees for using an overdraft, as long as you stay within your free limit.

If you need to borrow more money, contact your bank and formally arrange for the limit to be increased. Some banks may allow an extension to your free limit but most will charge you ‘arranged’ or ‘planned’ overdraft interest.

If you exceed your free overdraft limit without authorisation, it could negatively affect your credit score and some banks will charge you for bounced payments.

Nationwide doesn’t charge any fees but it does place restrictions on your account, preventing you from taking cash out or using your card, until you bring the balance back within your agreed limit.

 

How do I open a student bank account?

You can apply for a student account from age 17 or 18 – we explain the age limits for each provider in the table above.

Barclays, HSBC and Santander have opened up their student accounts to degree apprentices in their first year of a qualifying course, as well as those studying at university.

As with all bank accounts, you’ll need proof of identity (passport, birth certificate, driving licence) and proof of address.

You’ll also need the UCAS confirmation letter from your university (or copy of your Apprenticeship agreement signed by your employer) as unconditional proof of acceptance.

Some banks may accept a copy of your A-Level results if you have a conditional offer but you’ll need to check first.

Can I apply online?

Even though most banks will let you start the application process online, they may ask that you visit a branch with proof of identification before you can actually start using it.

Barclays is an exception – students can open an account in minutes by downloading its mobile banking app, uploading a selfie video and scanning an identification document with their UCAS code. If you don’t have a UCAS code, you’ll need to visit a branch to complete your application.

Can I open more than one student bank account?

You can’t open multiple student bank accounts with the same provider and some providers explicitly say that you shouldn’t already have a student account when you apply (HSBC and Nationwide).

Others ask that you use them as your main student account (Barclays, NatWest, RBS, Santander) so although you could potentially open a second student account with these banks, they reserve the right to close it if you’re not paying in your loans and other income.

It’s also worth remembering that having access to a larger overdraft is risky as you will have to repay student overdraft debt when you graduate.

You can apply for an additional standard current account without an overdraft facility – and digital banks such as Monzo and Starling offer innovative smartphone helps that could help you manage your student loan and keep on top of spending.

Can I switch my student bank account?

Yes, you don’t have to stay with the same provider for the duration of your course.

All of the accounts in our table are signed up to the ‘switch guarantee’ which means you can switch student accounts in just seven days.

Before you switch, check that your new bank will match your current 0% overdraft and offer the same terms as other students in that year of study.

Find out more: How to switch an account in seven days – a step-by-step guide

What happens to my student bank account when I graduate?

Once you’ve got your degree, banks will usually convert your student account to a graduate account, but make sure other banks don’t beat it.

Some graduate accounts are only open to existing student account customers (Bank of Scotland, Lloyds, Nationwide, Santander) but most are open to anyone who has graduated from university within the past two or three years.

You may face a sudden drop in the amount you can borrow interest-free when you graduate so plan ahead to avoid hefty charges.

Find out more: Which? tips to help you clear your student overdraft debt

What is a graduate account?

Most high street banks offer current accounts specifically tailored to graduates, with generous interest-free overdrafts for up to three years.

Annual limits vary from £1,000 to £3,000 and tend to reduce each year, to encourage you to start clearing your overdraft.

You’re eligible to open most graduate accounts for two or three years after finishing your course – when you apply, the bank will ask to see your degree certificate as well as proof of ID and address.

 

Do I need a graduate account?

Even if you start earning money as soon as you graduate, having an interest-free overdraft for a few more years could be an important safety net.

If you’re convinced you won’t need to borrow any money, you can shift your attention to accounts that pay you interest for being in credit or other perks such as cashback on household bills.

Packaged accounts can also be cost-effective, as long as you use most of the benefits included. Which? assesses the value of insurance included in these accounts every year to rate the best and worst packaged accounts.

Should I switch banks when I graduate?

If you already have a student account, your bank will automatically convert it to a graduate account once you finish you university or college.

But there’s no need to stick with the same bank if another one is offering a better deal.

Even with debts, students are an attractive long-term prospect due to their heavily increased earning potential.

Can I switch if I’m overdrawn?

Yes, although you’ll need to pay back any overdraft debt.

This won’t be a problem if your new bank is happy to offer an equivalent overdraft – and you can still use the seven-day switching service to move accounts. But if it won’t match your existing overdraft limit, you may be unable to make the switch.

Don’t switch until you’ve contacted your bank to see what your options are, as some banks will ask you to repay the full amount within a few days of closing your account.

Will I get the maximum overdraft?

Not necessarily. Advertised overdraft limits are rarely guaranteed – you’ll spot that most banks describe interest-free overdrafts as being ‘up to’ certain limits – so the amount you’re offered may end up being lower.

Most student account overdrafts are tiered, slowly increasing each year, so you may not get the maximum until your last year of study.

As with any form of borrowing, it’s sensible to check your credit score before you apply. We explain how to do this for free here.

It’s worth knowing that if you’ve never borrowed money, your score might be lower than you expect, because lenders generally want to see a record of successful repayments.

Find out more: Credit reports – how to improve your score

What if I exceed my 0% graduate overdraft?

Avoid straying beyond your interest-free limit.

Most banks will try to stop payments before they take you into an unarranged overdraft – and if this does happen, it could negatively affect your credit score.

If you need to borrow more money, ask your bank if it will let you formally arrange for a planned overdraft and charge you interest (EAR).

What happens when my graduate deal ends?

Your bank will contact you two months before your graduate deal is due to end to let you know that your account will switch to a standard current account.

This should be one of its fee-free current accounts – for example, Nationwide’s FlexGraduate becomes a FlexDirect account – but make sure you check the terms and charges that will apply.

Many people stick with the same bank or building society throughout their entire life, but switching takes just seven working days using the Current Account Switching Service.

Some banks offer one-off cash bonuses for switching, although don’t let this be the sole reason for choosing that account.

Our table of the best and worst banks reveals how real customers feel about their bank, and Which? Recommended Providers offer great products as well as excellent customer service.

What if I’m still overdrawn when my graduate account ends?

If you’re still in the red once your graduate account draws to a close, after two or three years, you could be stung with interest and fees, which could quickly mount up.

A handful of banks offer interest-free overdrafts on standard accounts – First Direct is the most generous, offering £250 at 0% – although you should check your credit score before you apply.

Credit cards with an introductory 0% interest deal on balance on transfers are another option, enabling you to shift your debt and buy some more time to pay it off.

Find out more: How to deal with debt – where to find free advice

Should I apply for a graduate loan?

Your bank may offer graduate loans exclusively for existing current or graduate account customers.

Always compare the rate you’re offered to other personal loans.

If you decide to continue your education, the Student Loans Company offers Master’s loans worth up to £11,570 for courses starting from August 2021.

You only start repaying the loan once your income reaches a certain threshold, currently £21,000 a year (£1,750 a month or £403 a week).